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Protectionism is usually an inferior policy option that makes everyone poorer. It amounts to a state subsidy of uncompetitive industries, redirecting resources

Protectionism is usually an inferior policy option that makes everyone poorer. It amounts to a state subsidy of uncompetitive industries, redirecting resources away from other, more productive parts of the domestic economy. Investing in local industry is perfectly wise. A country that has a skilled workforce, good infrastructure and efficient capital flows is likely to be highly competitive on an international level. Propping up industries just because it's politically easy is the first step down a very slippery slope. Alstom is comfortably profitable and doesn't need propping up. What's more, it is substantially reliant on export contracts that could be severely jeopardised in a culture of protectionism. The multi-billion dollar contracts it has to provide trains to India, South Africa and the US are all under threat if those countries decide "why should we give all this money to a French company when we could build these trains ourselves?". Protectionism destroyed the British national morale in the 1970s. The country was weighed down with an unsustainable burden of uncompetitive industries, propped up by the public purse because it was too politically painful to allow them to decline. The resulting swing to Thatcherism resulted in a swift and brutal end to those industries - rather than a managed decline, they were simply culled off, with utterly traumatic effects on a generation of workers who weren't prepared for it. National morale based on an economic sleight-of-hand is a poor substitute for national morale based on industries that are genuinely capable of taking on the world and winning.

TheSpiceIsLife 8y ago
That’s fair. And, if we take a global / universal perspective it makes sense to optimise production where it’s most economical. I guess my wider point is: we ignore nationalistic sentiment to our own detriment, as evidenced by Brexit. We probably ought to consider there is a spectrum rather than an either/or.
- pas 8y ago
  > we ignore nationalistic sentiment to our own detriment, as evidenced by Brexit. What do you mean by this? Could you explain this a bit please?
  - chosenbreed37 8y ago
    I'm not the op so I'll pass on addressing the question directly. An earlier comment gave a robust criticism of protectionist policies. In general I'm inclined to agree. But I'd like to draw attention to potentially negative impact to society if things are not managed properly. And really a lot of it comes to trade offs. It might be more efficient to manufacture certain goods elsewhere but it is undesirable to see local industries collapse without alternative employment for the people concerned. I think that in some ways it is better to have a local relatively inefficient sector that keeps people employed. As an example I'm told that of late the French economy has been operating significantly more efficiently than the UK. But conversely unemployment in the UK is at record lows. The suggestion being that it takes more people to produce a unit of work as compared to France. I'd rather have it this way. The thing is that being a steel worker, a builder, machine operator in a car factory is about more than earning a living. As a result when a local industry is dismantled people lose a lot more than their paychecks. This is not to say that local industries should be protected at all costs but that perhaps thee could be a way to gradually re-train the workforce ahead of time.

TheSpiceIsLife 8y ago

That’s fair. And, if we take a global / universal perspective it makes sense to optimise production where it’s most economical. I guess my wider point is: we ignore nationalistic sentiment to our own detriment, as evidenced by Brexit. We probably ought to consider there is a spectrum rather than an either/or.

pas 8y ago
> we ignore nationalistic sentiment to our own detriment, as evidenced by Brexit. What do you mean by this? Could you explain this a bit please?
- chosenbreed37 8y ago
  I'm not the op so I'll pass on addressing the question directly. An earlier comment gave a robust criticism of protectionist policies. In general I'm inclined to agree. But I'd like to draw attention to potentially negative impact to society if things are not managed properly. And really a lot of it comes to trade offs. It might be more efficient to manufacture certain goods elsewhere but it is undesirable to see local industries collapse without alternative employment for the people concerned. I think that in some ways it is better to have a local relatively inefficient sector that keeps people employed. As an example I'm told that of late the French economy has been operating significantly more efficiently than the UK. But conversely unemployment in the UK is at record lows. The suggestion being that it takes more people to produce a unit of work as compared to France. I'd rather have it this way. The thing is that being a steel worker, a builder, machine operator in a car factory is about more than earning a living. As a result when a local industry is dismantled people lose a lot more than their paychecks. This is not to say that local industries should be protected at all costs but that perhaps thee could be a way to gradually re-train the workforce ahead of time.